Quayle Munro Holdings PLC Interim Report 2012

for the six months ended 31 December 2012

Company registration number

SC 72014

Highlights• Credible outcome in difficult market conditions.

• Revenue £4.8m compared with £3.8m in 2011 (restated to exclude the divested Edinburgh operation), an increase of

26%.

• Profit after tax of £0.5m (2011: loss £0.5m).

• Advised on a number of major transactions, including the sale of Wood Mackenzie to Hellman & Friedman.

• Good current pipeline of potential and mandated work across the business.

• Interim dividend of 11p per share has been declared (2011: 11p per share).

• Net assets of £31.5m (2011: £39.7m).

Christopher Kemball, Chairman, commented: "There has been an improvement in our pipeline of potential and mandated assignments in the second half of the financial year; however it continues to be difficult to anticipate the timing of completion of transactions. Although macro-economic conditions continue to be uncertain, we remain positive about the full year outcome. We intend to continue to invest in the development of the business within a framework of tight cost control and a strong balance sheet." For further information:Andrew Adams, Chief Executive, Quayle Munro: +44 (0)20 7907 4200

Sandy Fraser, N+1 Singer: +44 (0) 20 7496 3178

Jonny Franklin-Adams, N+1 Singer: +44 (0)20 7496 3000

Chairman and Chief Executive's Statement ResultsThe first half of our financial year has been characterised by economic and financial uncertainty. However, the Group achieved a resilient performance overall as we continued to benefit from our leading market position in media and technology advisory services and our strong balance sheet.

The Group result was ahead of the first six months of last year. Revenues for the period were £4.8m compared with £3.8m

(restated to exclude the Edinburgh operation) for the previous period, an increase of 26%.

The profit on ordinary activities after taxation for the period was £0.5m compared with a loss of £0.5m, after discontinued operations, for the previous period. The profit after taxation includes a £0.2m share of profit of Quayle Munro Project Finance (see below) and is stated after administrative expenses of £3.8m, comprising salary, overheads, accrued bonus and head office costs (2011: £3.0m restated), and other expenses of £0.5m, comprising long term incentive scheme and deferred bonus costs (2011: £0.5m restated).

Basic earnings per share were 12.1p (2011: loss per share of 11.2p) with fully diluted earnings per share of 12.0p (2011: loss per share of 10.3p).

In September 2012 the disposal of Quayle Munro's non-core Edinburgh-based project advisory business to its senior management team was completed. Quayle Munro Project Finance LLP ("QMPF") was established by the senior management team and Quayle Munro has retained a 30% membership interest in QMPF. In return for the Group's interest, Quayle Munro provided QMPF with

£0.4m in cash for working capital and a loan facility. From 1 January 2013 the management of QMPF has the right to repurchase up to the whole of the Group's membership interest subject to a minimum 20% IRR being earned by the Group on all capital employed. QMPF contributes to accommodation, finance and compliance costs. As an associate, the Group's investment has been equity accounted within these financial statements. The previous period's statement of comprehensive income has been restated to exclude the discontinued operations which were divested in the second half of 2012.

Board changesChristopher Kemball joined the Board as Non-Executive Chairman and Peter Norris and David Fitzsimons joined the Board as Non-Executive Directors following the Annual General Meeting on 14 November 2012; Peter Norris is Chairman of the Audit Committee and David Fitzsimons is Chairman of the Remuneration Committee. Ian McLean remains as Senior Independent Director. Simon Woolton, our Chief Operating Officer since 2010, joined the Board at the same time as an Executive Director to take on the additional responsibility of Group Chief Financial Officer. Glen Lewy joined the Board as a Non-Executive Director on 16 January 2013. All the new Directors have a background in developing corporate finance advisory businesses and successful track records in making principal investments.

The following Directors resigned on 14 November 2012: Brian Finlayson, Tim Guinness and Nick Lyons. Andrew Tuckey, the previous Chairman, also resigned from the Board but remains with the Group as a senior adviser. The Board would like to record their thanks and appreciation for the service they have all given to the Company.

New strategyThe Company has an excellent position in the business to business data, analytics and software sector within media and technology, particularly in advising entrepreneurs and financial sponsors on the sale of their businesses. Our strategy is to build out this capability into adjacent sectors including financial technology and marketing and communications by hiring key bankers with strong franchises. We also plan to add two to three additional sectors which have the same characteristics as the media and technology sectors, namely high growth, strong entrepreneurial content, relationship driven, attractive to venture capital and significant M&A activity.

As described below, the Group has cash of around £15m and has no borrowings. Our new strategy is gradually to invest this cash, after prudently providing reserves for liquidity and follow-on investments, in high growth unlisted companies with strong management teams, in sectors which we cover on the advisory side and where we have an already strong relationship. A good example of this new investment strategy is our latest investment in MLex Limited ("MLex") which is described in more detail below.

Advisory businessDuring the period we advised on a number of completed deals, notably the sale of Wood Mackenzie, the leading content, analytics and consulting business, on behalf of Charterhouse Development Capital to Hellman & Friedman for £1.1 billion in July 2012. We also advised on the sale of: Mekentosj, a developer of academic reference management software, to Springer Science + Business Media; Exclusive Analysis, a provider of political risk intelligence, to IHS Inc.; and Energy Publishing, a leading provider of market news, insight, data and events covering the global thermal and coking coal markets to IHS Inc.

Although the level of M&A activity worldwide continues to be very low, we are focussed on the provision of high quality advice to our clients and our pipeline of mandated assignments is strong.

Investments Morris Homes LimitedMorris Homes Limited, in which we have a 22.96% shareholding, has traded satisfactorily in the nine month period to 31

December 2012 with turnover of £89.9m (2011: £101m) and operating profits of £11.9m (2011: £14m). Reservations and visitors to the open sites have been encouraging during the early weeks of the year. As a result of the valuation assessment performed at the period end we have increased the value of our holding by £0.4m.

Other investmentsAt the year end we reported on two new investments in Duvet & Pillow Warehouse Limited and MLex. Both companies are reporting positive progress. Of our other smaller investments, AMG Systems Limited ("AMG") delivered a less buoyant set of results for 2012 than 2011 and we have decreased the valuation of our shareholding by £0.2m. Moneybarn performed satisfactorily during 2012, although trading remains challenging. As a result of the valuation assessment, an impairment charge of

£0.06m was taken on Nevis Range Development Company plc ("Nevis Range") which is now fully impaired along with Vascular Flow Technologies Limited ("Vascular"). Nevis Range remains broadly cash neutral and Vascular continues to encounter difficult trading conditions.

There has been no change in the fair value of the investments held other than Morris, AMG and Nevis Range.

With an already strong position in Europe and the USA, MLex is raising additional equity to expand its service into Brazil and

China. Since 31 December 2012, we have committed to invest a further €1.3 million in the business bringing our shareholding to

13.4% of the enlarged equity. MLex was founded five years ago and provides subscription based intelligence, commentary and analysis on the regulatory environment for legal, finance and investment professionals.

Net assets and liquidityThe Group continues to hold significant cash resources. These are held on short term deposits with three major UK retail banks. The Group strategy is to hold cash for working capital and regulatory capital purposes with the remaining cash being held for investment purposes.

The Group balance sheet as at 31 December 2012 shows net assets of £31.5m which is equivalent to 690p per share and this compares with £31.7m and 696p per share as at 30 June 2012 and £39.7m and 870p per share as at 31 December 2011.

After payment of the proposed dividends set out below the Group will have cash resources of approximately £14.5m.

DividendThe Directors propose an interim dividend of 11p per share (2011: 11p per share) to be paid on 10 April 2013 to shareholders on the register at the close of business on 22 March 2013.Risks and uncertaintiesThe Board considers that the principal risks and uncertainties facing the Group are consistent with those disclosed in the Annual

Report and Accounts 2012 where a list of the risks and uncertainties can be found on page 13.

Remuneration policyThe new Board believes that the existing remuneration schemes are overly complicated and inadequate both to incentivise existing top performers and to attract top quality talent. The Remuneration Committee is accordingly working with advisers to produce a new and simpler scheme which will concentrate on a fair and transparent apportionment of profits between staff bonuses and

shareholder dividends and enable senior executives to participate in the future growth of the business by buying equity. Full details ofthe new scheme will be sent to shareholders in due course and the appropriate approvals sought.

ProspectsThere has been an improvement in our pipeline of potential and mandated assignments in the second half of the financial year; however it continues to be difficult to anticipate the timing of completion of transactions. Although macro-economic conditions continue to be uncertain, we remain positive about the full year outcome. We intend to continue to invest in the development of the business within a framework of tight cost controlanda strong balance sheet.Christopher Kemball Andrew Adams13 March 2013

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